Workers’ compensation claims under section 537.2 of the Illinois Insurance Code
In Skokie Castings, Inc. v. Illinois Ins. Guar. Fund, an employee of Skokie Castings was injured by a bullet wound and sought workers compensation from her employer. Skokie Castings was a qualified self-insurer with respect to workers’ compensation, but it had also purchased two excess workers’ compensation policies from Home Insurance, the insurer. The insurer paid the excess liability until it became insolvent, and Illinois Insurance Guaranty Fund (the “Fund”) began paying benefits to the injured employee. Once the Fund notified the employer that the claim was nearing exhaustion because the $300,000 cap on covered claims under section 537.2 of the Illinois Insurance Code applied and terminated payments, the employer filed a declaratory action seeking the court to declare that the cap did not apply and the Fund improperly terminated payments.
The court held that workers’ compensation claims under section 537.2 of the Illinois Insurance Code are not narrowly limited to claims brought by employees but may extend to claims of policyholders of workers’ compensation policies issued by insolvent insurers; therefore, the $300,000 cap did not apply to the employer’s claim for reimbursement.
The court next held that when an employer who has elected to self-insure under the Workers’ Compensation Act and its excess insurer becomes insolvent, the employer does not remain liable for payment of all excess obligations until it becomes insolvent; rather, the Fund must pay those obligations. The court followed the majority of other jurisdictions and found that had the legislature wanted to exclude or limit the Fund’s obligation regarding excess workers’ compensation policies purchased by self-insuring employers, it could have expressly done so.
Skokie Castings, Inc v. Illinois Ins. Guar. Fun, 964 N.E.2d 1225 (Ill. App. 1 Dist., 2011, No. 1-11-1533
